Difference between Right issue | Private Placement | Preferential Allotment

Sr. No

Basis of Difference

Right Issue

Private Issue

Preferential Allotment

1

Applicable provisions under Companies Act, 2013

Section 62(1)(a) read with Rules

Section 42 read with rule 14 Companies (Prospectus and allotment of securities) Rules,2014

Section 62(1)(c ) read with rules 13 of Companies (share Capital and debentures)Rules,2014 and Section 42 read with rule 14 Companies (Prospectus and allotment of securities)

Rules,2014

2

Type of Security

Only Shares can issue. (Equity and Preference)

Any security can issue. (Equity, Preference Debenture etc.)

Only shares can issue (Equity and Preference)

3

Eligible for Offer

Issue of shares to existing Equity shareholder in proportion to their existing shareholding

Offer of shares to Investors or any selected group of person or any outsider (other than by way of public offer) Invitation in one go max- 50 Persons Max during year- 200 persons

Issue of shares to Both Existing Shareholders and/or outsiders.

4

Approval Required

Approval of Board of Director through Board Resolution required.

Board & Shareholder approval *(General Meeting)

Board & Shareholder approval *(General Meeting)

5

Offer period

Minimum Period-15 days Maximum Period - 30 days (however in case of private company if consent from 90% of the shareholder then the offer period can be less then as defined above)

* Add 3 additional days extra for dispatch

No specific minimum offer period defined under this section.

However, maxium period of offer can be 365 days.

No specific minimum offer period defined under this section.

However, maxium period of offer can be 365 days.

6

Format of offer Letter

No specific format

PAS-4(offer Letter) PAS-5(Complete record)

PAS-4(offer Letter) PAS-5(Complete record)

*No such Format in case of offer only to existing

members.

7

Forms to be filled

1.PAS-3 (with in 30 days from allotment)

PAS-3 needs to file with in 30 days of passing of board resolution for allotment of shares.

1.  MGT-14 (with in 30 days passing of special resolution in general meeting)

2.  PAS-3(with in 15 days of allotment of shares)

1.  MGT-14 (with in 30 days passing of special resolution in general meeting)

2.   PAS-3(with in 15 days of allotment of shares)

8

Time period for allotment of securities *otherwise it will be treated as deposit

Within 60 days for the Date of Receipt of Application Money.

Within 60 days for the Date of Receipt of Application Money.

Within 60 days for the Date of Receipt of Application Money.

9

Separate Bank Account

No Separate Bank Account Required

Separate Bank account Required

Separate Bank account Required

10

Fund utilization

Fund can be utilize any time after receipt of same

Fund can’t be utilize only after filing of PAS-3.

Fund can’t be utilize only

after filing of PAS-3.

11

Valuation Report

Valuation Report is not Mandatory,

*Valuation report is mandatory only in case of issue to non- existing non-resident shareholder

Valuation Report is not Mandatory

Valuation Report is Mandatory.

12

Renounce the offer letter option

Shareholders have rights to Renounce/accept/reject the offer letter

*Subject to authorization in AOA

No such right available

No such right available

13

Explanatory Statement

Not applicable because no shareholder approval is required

Notice should contain Explanatory statement as per rule 14(2) of Companies (Prospectus and allotment of securities) Rules,2014

Notice should contain Explanatory statement according to rule 13(d) of Companies (share Capital and debentures) Rules, 2014 read with rule 14(2) of Companies (Prospectus and allotment of securities) Rules,2014

14

Minimum Subscription or Investment size

No such minimum subscription required

No such minimum subscription required

No such minimum subscription required

15

Mode of Receipt of Subscription money

Subscription money can be receive in cash or through Banking Channel

Subscription money can be receive only through Banking Channel

Subscription money can be receive in cash or through Banking Channel

16

Debenture issue

Debenture can't be issued through right issue of shares

Debenture can be issued through right issue of shares

Debenture can't be issued through this method

17

Non Convertible Preference Shares

Can't be issued through right issue of shares

Can be issued through right issue of shares

Can't be issued through this method